The New Gateway Test
The proposed amendments will establish specific criteria to determine whether a worker is a contractor. A worker will be classified as a contractor if all the following conditions are met:
1. Written Agreement: The worker has a signed contract identifying them as an independent contractor.
2. Flexibility to Work for Others: The worker is not restricted from working for other clients or businesses.
3. Control Over Work Hours: The worker is free to set their own hours or subcontract work.
4. No Penalty for Declining Work: The business cannot terminate the contract for refusing additional tasks or engagements.
If these conditions are met, the worker will not be considered an employee, and the full test under Section 6 of the Act will not apply.
Implications for Businesses
1. Clarity and Certainty: Businesses will have a clearer framework for engaging contractors.
2. Increased Contractor Use: These changes may encourage businesses to rely more on contractors.
3. Legal Risks Remain: Employers must ensure their agreements meet the criteria to avoid disputes over worker classification.
Preparing for the Changes
The amendment bill is expected to be introduced in 2025. Employers should begin reviewing their contractor agreements to ensure they comply with the upcoming gateway test.
Conclusion
The changes aim to provide greater clarity and consistency in contractor classification while balancing the needs of businesses and workers. Employers should stay informed and prepare for the legislative updates to ensure compliance and minimise legal risks.
